Reporting frameworks must not neutralise a wider commitment to integrity

Published in The Star, Pretoria News, The Mercury & Cape Times

31st October 2018

Reporting frameworks must not neutralise a wider commitment to integrity

Henley Business School Africa may be ranked first in the annual PMR.africa survey on Accredited Business Schools offering MBA Degrees and rated among the top business schools in the world but its Dean and Director Jonathan Foster-Pedley is as proud of the incorporation of moral imperatives in its MBA programme.

As South Africa looks to the corporate sector to recover from years of corruption and waste, he says strong reporting frameworks can’t come at the expense of a wider commitment to integrity, “Against this backdrop we are passionate that business leaders have a role to play in helping to keep society as a whole on the straight and narrow. Hence our #CorporateActivism campaign which we talk about as often as we can – most recently at a debate with the Global Business Roundtable at Sandton Convention Centres.”

At issue is how business leaders balance the short and long-term interests of their shareholders against the moral imperative. “The principles of good corporate governance have been given much greater definition in recent years. Tighter regulations and clear guidelines and reporting practices, such as King IV, have left businesses with very understandable frameworks to interpret the work of their boards and their leadership. This is good, but the challenge is not to allow these formalised interpretations to become the whole thing. It’s especially important to remember an old adage. Sometimes, what looks like legitimate behaviour could be illegal, and what looks illegitimate could be absolutely within the bounds of the law.”

At the heart of the #CorporateActivism campaign is how to balance the short term and long term interests of shareholders against the moral imperative, why business is about profit and scruples.

“Corruption”, he elaborates, “requires two complicit parties and it’s fair criticism that in South Africa we come down hard on the appearance of graft in politics, but often give business leaders a pass on the premise that it’s just business, if you don’t grease the wheels, the deals don’t get done. That attitude can’t continue. No economy can really grow in an atmosphere of corruption. It creates a lack of accountability far wider than individual deals or boardrooms and the poorest suffer most. It’s a systemic problem that works across human relationships and bad leaders create the norms for their corporate culture and society as a whole.”

There is a school of thought that says sometimes corruption is tolerable in the name of getting things done and can compensate for institutional weakness. This has thankfully been thoroughly debunked by everyone from Transparency International to the World Bank. Corruption always has a negative effect on institutions, tax revenue and human development. In South Africa right now, we have multiple case studies for the consequences of poor ethical judgement to businesses.

While the Dean welcomes the present response to bribery, corruption and State capture, he asserts, “Sooner or later it will be business as usual and the onus is on us as teachers and mentors to ensure that our next generation of leaders don’t become complacent and slip back into the bad old ways. Just as corruption becomes systemic, we need to be educating our future leaders in a way that good governance becomes systemic.

“Business students shouldn’t just learn how to read a profit and loss sheet or improve productivity for their clients. Business schools should follow broader curricula, looking at the holistic development of students, who in turn will be as committed to creating a positive culture among their future peers. We need to be blunt, to explain how to turn down a request for a bribe. This needs new ways of teaching which can only be taught experientially. It quite literally requires the human touch. Our mantra shouldn’t be money, money, money: it should be people, people, people.”

PMR.africa CEO Johan Hattingh reveals that of 18 business schools rated this year, Henley Africa achieved the highest ranking on a mean score of 8.23 out of a possible 10. A national sample of 300 HR directors, managers and line managers from listed and large companies, SOEs and government departments were invited to rate the MBA graduates and students in their employ.